Tax cuts that broke the budget

The government would have had an additional $38 billion for last year's federal government budget and would have collected an extra $169 billion over the past seven years had it not been for unsustainable income tax cuts that were made in the lead up to the GFC. Had the income tax cuts not been made, the current budget would not be in deficit and we would be having a very different discussion about funding priorities.

Budget difficulties are not something high income earners are likely to have been concerned with over the past seven years as they were the biggest beneficiaries of these tax cuts. Of the $169 billion in tax cuts, 42 per cent of them or $71 billion went to the top 10 per cent of income earners. The top 10 per cent got more in tax cuts than the bottom 80 per cent.

This sheds an entirely new light on the current debate about whether we can afford things like the NDIS or Gonski reforms. If the budget is in deficit because of income tax cuts that primarily benefited the highest income earners and that is being used as a reason not to give more money or support to the poor and disadvantaged, then political debate in Australia has reached a new low.

>> Share this Page

The Australia Institute is the country’s most influential progressive think tank. We conduct research on a broad range of economic, social and environmental issues in order to inform public debate and bring greater accountability to the democratic process.